Nacala Development Corridor Performance Evaluation 2012

STC- NETHERLANDS MARITIME UNIVERSITY, ROTTERDAM
Nacala Development Corridor
Performance Evaluation
An evaluative research focused on producing solutions for
inefficiencies and bottlenecks associated with the Nacala
Development Corridor.
A Dissertation Submitted in Partial Fulfillment of the Requirements for the Degree of Masters in
Shipping and Transport
Freeman Dickie
Rotterdam, the Netherlands
15-Feb-12
ABSTRACT: This paper presents an evaluative research of the problems related to the logistics,
operational bottlenecks and constraints of the Nacala Development Corridor. It sets forth the
status quo, reviews the related literature and evaluates the modus operandi. The paper
concludes with recommendations of remedial actions and areas for further research.

Nacala Development Corridor Performance Evaluation
2 | P a g e F R E E M A N D I C K I E N e t h e r l a n d s M a r i t i m e U n i v e r s i t y
PREFACE
This paper presents the final report of the Master of Shipping and Transport thesis titled ―Nacala
Development Corridor Performance Evaluation‖. This paper is part of my masters program at
the Netherland Maritime University, Rotterdam.
The thesis work has been conducted while working for Corredor de Desenvolvimento do Norte
(CDN), under the direct supervision of Eng. Agostinho Langa (MSc), the Nacala Port Executive
Director. CDN is a private company with a 15 year concession to operate the Port of Nacala and
the railway link to Malawi which makes up the Nacala Development Corridor.
The research has been to evaluate the performance of the corridor producing recommendations
and solutions for inefficiencies and bottlenecks associated therewith.
I would like to extend my appreciation and gratitude to my thesis supervisors Mr. Corné Hulst,
Mr. René Naudts and Eng. Agostinho Langa, for their guidance and advice. I also thank all my
colleagues at CDN and CEAR for their support and assistance during this research study. Not
forgetting Amalia Dickie and Blessings Maturure for their proof-reading my material before
presentation. Lastly to my family for their unconditional support and encouragement during the
whole Masters course.
Freeman Dickie
Rotterdam, February 2012

DECLARATION
The work contained in this thesis paper was carried out by the author while studying at the
Netherlands Maritime University, from 2010 – 2012. It is his own original work except where due
references are provided. It has never been submitted to any other university for an award or
certification. No part of this work shall be reproduced without prior permission from the author or
the Netherlands Maritime University.
Freeman Dickie
___________________________________
Date: 15 February 2012

To Sue and the kids
For all the time you didn‘t have a husband and father present and you had to cope without me.

Table of Contents
PREFACE..............................................................................................................................................2
DECLARATION ....................................................................................................................................3
Glossary of terms................................................................................................................................11
Abbreviations ......................................................................................................................................12
1 INTRODUCTION.........................................................................................................................13
1.1 The need for a research study ...........................................................................................13
1.2 Problem assessment...........................................................................................................13
1.3 Problem definition................................................................................................................14
1.4 Objectives of the study........................................................................................................14
1.5 Main research questions.....................................................................................................14
1.6 Limitations of study..............................................................................................................14
1.7 Implications of the research................................................................................................14
1.8 Structure of this paper.........................................................................................................15
2 STATUS QUO.............................................................................................................................16
2.1 Historical Information ..........................................................................................................16
2.2 Background information of the Nacala Development Corridor........................................16
2.3 CDN- Nacala Port................................................................................................................17
2.3.1 Port authority................................................................................................................17
2.3.2 Port operations.............................................................................................................17
2.3.3 Container terminal .......................................................................................................17
2.3.4 Multi-purpose terminal.................................................................................................17
2.4 CDN- Railways ....................................................................................................................18
2.5 Present conditions and development trends of the Corridor area...................................18
2.5.1 Northern Mozambique.................................................................................................18
2.5.2 Malawi...........................................................................................................................18
2.5.3 Zambia..........................................................................................................................18
3 RESEARCH METHODOLOGY .................................................................................................19
3.1 Introduction ..........................................................................................................................19
3.2 Conceptual (theoretical) framework...................................................................................19

3.3 Methods of data collection..................................................................................................19
3.3.1 Primary data collection methods ................................................................................19
3.4 Research tools.....................................................................................................................20
3.4.1 Observation tool...........................................................................................................20
3.4.2 Interview questions to Corridor/Port users ................................................................21
3.4.3 Interview questions to Corridor representatives........................................................21
3.5 Data analysis .......................................................................................................................22
3.6 Conclusion ...........................................................................................................................22
4 LITERATURE REVIEW..............................................................................................................23
4.1 Introduction ..........................................................................................................................23
4.2 Port governance model.......................................................................................................23
4.2.1 Service port model.......................................................................................................23
4.2.2 Tool port model............................................................................................................23
4.2.3 Landlord model ............................................................................................................24
4.2.4 Private Service port model..........................................................................................24
4.3 Port Authority‘s role in improving hinterland accessibility ................................................24
4.4 Gateways .............................................................................................................................25
4.5 Transport corridors..............................................................................................................25
4.6 The maritime/land interface................................................................................................26
4.7 Hinterland.............................................................................................................................27
4.8 Types of hinterlands............................................................................................................28
4.8.1 Macro-economic hinterland.........................................................................................28
4.8.2 The physical hinterland ...............................................................................................28
4.8.3 The logistical hinterland...............................................................................................29
4.9 Bottlenecks...........................................................................................................................29
4.9.1 Infrastructure and equipment bottlenecks .................................................................29
4.9.2 Regulations ..................................................................................................................30
4.9.3 Supply chain bottlenecks ............................................................................................30
4.10 The Challenges of Landlocked Countries .........................................................................30
4.11 Four Possible Trade Routes for Malawi ............................................................................32
4.12 Port selection .......................................................................................................................32
4.13 Port competition...................................................................................................................33
4.13.1 Inter-port competition...................................................................................................33

4.13.2 Intra-port competition...................................................................................................33
4.14 Port performance.................................................................................................................33
4.14.1 Port effectiveness ........................................................................................................34
4.14.2 Port efficiency...............................................................................................................34
4.15 Key Performance Indicators ...............................................................................................35
4.15.1 Operational performance indicators...........................................................................35
4.16 Conclusion ...........................................................................................................................37
5 MODUS OPERANDI...................................................................................................................38
5.1 Introduction ..........................................................................................................................38
5.2 Governance structure..........................................................................................................38
5.3 Port cargo operations..........................................................................................................38
5.3.1 Container handling.......................................................................................................38
5.3.2 Dry/break bulk handling...............................................................................................40
5.4 Current operations productivity and efficiency rate ..........................................................40
5.5 Railways operations............................................................................................................42
5.5.1 Nacala railway station .................................................................................................42
5.5.2 Nampula railway station ..............................................................................................42
5.5.3 Cuamba railway station...............................................................................................42
5.5.4 Entre-Lagos / Nayuchi International border post ......................................................42
5.6 Hinterland transportation of seaborne cargoes.................................................................43
5.6.1 Containers ....................................................................................................................43
5.6.2 Bulk Cargo....................................................................................................................44
5.7 Cargo throughput and vessel traffic...................................................................................44
5.8 Conclusion ...........................................................................................................................45
6 RESEARCH FINDINGS .............................................................................................................46
6.1 Introduction ..........................................................................................................................46
6.2 Quantitative research: Operations observation and evaluation ......................................47
6.2.1 Key performance indicators ........................................................................................47
6.2.2 Vessel operations ........................................................................................................48
6.2.3 Port gate operations ....................................................................................................49
6.2.4 Railway operations ......................................................................................................50
6.2.5 Border operations ........................................................................................................51
6.2.6 General observations ..................................................................................................51

6.2.7 Distribution center operations.....................................................................................51
6.2.8 Rail efficiency or low demand for capacity? ..............................................................52
6.3 Personal interviews .............................................................................................................53
6.3.1 What determines a shipper‘s port selection criteria?................................................53
6.3.2 Why has your cargo through Nacala Corridor gone down?.....................................54
6.3.3 Which other alternative ports do you use and what are the pull factors? ...............55
6.3.4 What do you think can be done to improve port productivity?.................................55
6.3.5 What are your cargo volumes and how are they split over the regional ports? .....56
6.4 A vicious cargo cycle...........................................................................................................57
6.5 Conclusion ...........................................................................................................................57
7 REASONS FOR THE BOTTLENECK SITUATION AND POSSIBLE SOLUTIONS .............58
7.1 Introduction ..........................................................................................................................58
7.2 Infrastructure and equipment bottlenecks .........................................................................58
7.2.1 Cargo handling equipment and machinery................................................................58
7.2.2 Lack of locomotives, railway equipment and deteriorating infrastructure ...............59
7.2.3 CEAR/CDN Locomotives ............................................................................................59
7.3 Regulatory bottlenecks .......................................................................................................60
7.3.1 Lack of One-stop Border Post ....................................................................................60
7.3.2 Monopolistic nature of stevedoring in the port ..........................................................60
7.3.3 Compulsory scanning at port entrance ......................................................................61
7.4 Supply chain bottlenecks....................................................................................................61
7.4.1 Lack of a centralized distribution center or inland container terminal .....................61
7.4.2 Documentation flow and coordination........................................................................62
7.4.3 Railways logistics.........................................................................................................62
7.4.4 Port/terminal logistics ..................................................................................................62
7.4.5 Lack of an EDI system ................................................................................................62
7.4.6 Lack of Key Performance Indicators awareness.......................................................63
7.5 Bottleneck impact analysis .................................................................................................64
7.5.1 Score analysis..............................................................................................................64
7.6 Conclusion ...........................................................................................................................65
8 CONCLUSION ............................................................................................................................66
8.1 Corridor potential.................................................................................................................66
8.2 The bottleneck situation......................................................................................................66
8.3 Port selection criteria...........................................................................................................66

8.4 Why other ports over Nacala?............................................................................................66
8.5 Cargo handling equipment .................................................................................................67
8.6 Port performance.................................................................................................................67
8.7 Port Authority.......................................................................................................................67
8.8 Conclusion ...........................................................................................................................68
9 Bibliography.................................................................................................................................69
10 Attachment 6.1: Statement of Facts for Pacific Trader 440N..............................................72
11 Interviews conducted ..............................................................................................................73

List of figures
Figure 2.1: Maputo, Beira and Nacala Corridors with railway networks 16
Figure 3.1: Conceptual framework 19
Figure 4.1: Allocation of responsibilities in port administrative models 24
Figure 4.2: Physical cargo flow in the Nacala Development Corridor 26
Figure 4.3: Various firms involved in a hinterland chain, source: Langen (2008) 27
Figure 4.4: The two kinds of hinterland; adapted from Rodrigue (2005 28
Figure 4.5: Types of port hinterland, (Notteboom and Rodrigue 2007) 29
Figure 4.6: Three types of bottlenecks in a transport system (World Bank report) 30
Figure 4.7: Intermodal Transit in SADC from LLCs (World Bank report) 31
Figure 4.8: Time related KPIs (Carriou, 2011) 36
Figure 5.1: Container handling productivity trends 41
Figure 6.1: Time performance indicators for Pacific Trader 48
Figure 6.2: Vicious transit cargo cycle observed at Nacala Port 57
Figure 7.1: Bottlenecks along the Nacala Corridor (by author) 58
List of tables and graphs
Table 1.1: Current CDN productivity ratios 13
Table 3.1: KPI Observation tool 20
Table 4.1: Four possible Trade routes for Malawi 32
Table 4.2 Summary of operational indicators, adapted from Carlson (1993) 36
Table 5.1: Average container dwell time at Nacala Port 41
Table 5.2: Dry/break bulk handling productivity 41
Table 5.3: Container cargo volumes in 2008 43
Table 5.4: Bulk cargo volumes in 2008 44
Table 5.5: Cargo throughput at Nacala Port between years 2000 and 2011 44
Graph 5.1: Cargo throughput at Nacala Port between years 2000 and 2011 45
Table 6.1: Nacala Port 2011 KPIs 47
Table 6.2: Pacific Trader vessel operations at Nacala Port 48
Table 6.3: Gate operations waiting time 49
Table 6.4: Main corridor rail stations 50
Table 6.5: Distribution centers‘ most common features 52
Table 6.6: Transit cargo vs. total throughput for past 4 years 52
Graph 6.1: Transit cargo as a percentage of total port throughput 53
Table 6.7: Client/agent port selection criteria 53
Table 6.8: Corridor users‘ response to reduced throughput 54
Table 6.9: Encouraging & discouraging factors 55
Table 6.10: Transmaritime cargo throughput via Nacala Port and Beira Port 56
Graph 6.2: Throughput comparison between Nacala and Beira Ports 56
Table 7.1: Impact analysis of performance impediments 63
Table 7.2: Score analysis and recommended mitigation action 64

Glossary of terms
Bottleneck- is a phenomenon where the performance or capacity of an entire system is limited
by a single or limited number of components or resources.
Hinterland- is an area or region that covers the port‘s sphere of influence, which is
interdependently connected to the port system.
Corridor- is a set of routes between interacting hub centers, integrating economic activities of
more than a single nation, providing access to the sea for landlocked countries.
Turnaround- this refers to the total time taken by a train or vessel from the time it arrives in
port, through cargo operations, until it leaves port.
Vessel- also referred to as a ship; a maritime vessel carrying cargo
Status quo- the current status situation
Modus operandi- the mode of operation

Abbreviations
CDN- Corredor de Desenvolvimento do Norte (Northern Development Corridor)
CEAR- Central East African Railways (Malawian Railways Authority, operated by CDN)
MOT- Ministry of Transport
LLCs- Landlocked Countries
CFM- Portos e Caminhos de Ferro de Mozambique (Mozambique Ports & Railways
Authority)
TN- Terminais do Norte (Stevedoring Company)
SADC- Southern Africa Development Community
UNCTAD- United Nations Conference on Trade and Development
TEUs- Twenty foot Equivalent Unit (containers standards size measures)
KPIs- Key Performance Indicators
FIFO- First in First out (sequence followed in releasing cargo)
EDI- Electronic Data Interchange
JICA- Japanese International Cooperation Agency

1 INTRODUCTION
Ports do not operate in isolation. Ports are part of a network system which connects both the
foreland and the hinterland making up a shipper‘s supply chain. Shippers consider how the
whole network fits into their supply chain when deciding on port choice. Most supply chains are
connected to transport corridors. Most corridors provide access to sea to the landlocked
hinterland.
Within these corridors there are key functional areas. When the functional areas are neglected
bottlenecks situations are formed that hinder the efficiency of the whole network. Like the
bullwhip effect, in most cases the negative consequences are usually reflected at the end of the
chain, in this case at the port. Hence most of the problems at ports and terminals may be but a
symptom of these bottleneck situations along the transport network. A proper diagnosis requires
looking at each key area and measuring its role, productivity and effectiveness as part of the
whole. A chain is only as strong as its weakest link.
Thus, improving port efficiency calls for a holistic approach at the whole supply chain and the
corridors connecting to the hinterland concerned. In responding to this need for an integrated
and comprehensive approach, it is essential to synergize port activities with the logistic services,
trade and cargo flow within the hinterland.
1.1 The need for a research study
Of late there has been growing interest in ports and transport corridors in the developing world,
coupled with The World Bank funded research studies. These studies focus on port reforms.
However, a subject on ports and corridor performance has received little attention in terms of
academic research. There has also been little research into the issues affecting the Nacala
Development Corridor performance and competitiveness.
While existing problems have been attributed to poor infrastructure, lack of equipment and
shortage of space, there is however lack of research on how high levels of productivity may be
attained with the existing resources within the corridor. For this reason there has been notable
reluctance in providing solutions to some of the bottleneck problems along the corridor. To
bridge this gap, a study is essential to specifically evaluate all key operational areas, identify the
bottlenecks and recommend possible solutions with the chief aim of increasing productivity and
efficiency.
1.2 Problem assessment
The Nacala Development Corridor has been characterized by inefficiencies and low productivity,
both in port and railway operations. Evidence of this has been noted in poor vessel and train
turnaround times, long dwell time for transit and international containers, congestion and delays.
The current CDN productivity ratios are as stated in table below.
Productivity Target Actual Deviation
Quay side productivity (TEUs) 10 6 40%
Average container dwell time (days) 5 8 37%
Transit container dwell time (days) 12 30 60%
Train turnaround time (days) 3 4 25%
Gate waiting time (hours) 1.5 6 75%
Table 1.1: Current CDN productivity ratios

Consequently, there has been loss of potential cargo and revenues to other much more
competitive regional ports.
1.3 Problem definition
Given the advantageous location of Nacala Port, its deep natural draft and diversity of
opportunities in its backyard hinterland, the port has great potential for growth. Nacala Port is
losing a big share of the hinterland market to Beira, Dar es Salaam, and Durban ports. The fact
that these ports are much further than Nacala Port from the hinterland, transportation to them
means high freight costs and long transit times. For instance it costs $2.500 for a twenty foot
container to Blantyre through Beira, yet it will cost $1.400 for the same container through Nacala
Port. But for one reason or the other, shippers seem to be favoring them over Nacala Port.
1.4 Objectives of the study
The research seeks to look for what can be done to improve efficiency and productivity of the
Nacala Development Corridor in order to increase Nacala Port‘s competitiveness within the
South-East African region? It will be focused on a study of the operational resources and
equipments side of requirements and will not discuss human resources. The specific objectives
of the research thus are:
1. To evaluate the current mode of operation in the Nacala Development Corridor with the
aim of identifying key functional areas;
2. To identify possible bottlenecks at these focal points;
3. To recommend possible solutions.
1.5 Main research questions
1. What are the key functional areas?
2. Which of the functional areas can be seen as the bottlenecks in the corridor?
3. What are the reasons of the bottleneck situation?
3.1. Why are shippers willing to take their cargo to ports that are further away, when
Nacala Port is the closest in distance and travel time?
3.2. What factors at Nacala Port discourage growth; and what factors at the competing
ports encourages growth?
4. What are the possible solutions to resolve the bottleneck situations?
1.6 Limitations of study
This research and study is limited to productivity investigations on port and railway operations
which are directly run by CDN and CEAR. The railway represent a high percentage share in the
modal split accessing the hinterland. However, references to other modalities will be noted as
necessitated by the research. The paper will also be limited to the scope covered by the Nacala
Development Corridor. To understand the application of the problem and proposed solutions at
a national level, the researcher recommends a detailed research and analysis on a wider scale.
This research does not investigate and apply the problem to financial performance in the
corridor; nevertheless similar trends may be identified since operational and financial
performances are interdependent.
1.7 Implications of the research
The results of this research may lead to recommendations to CDN management for a guided
implementation of the outcome. The results may also imply changes in port management
systems and processes as well as giving a new approach to operational management. Though

the research will be based exclusively on the Nacala Development Corridor, as the researcher
and author the intention is to give the work a global meaning and application.
1.8 Structure of this paper
This research paper is composed of eight chapters which are organized as follows:
Chapter 1 - This introductory chapter defines the problem and justifies the need for this
research. It presents the scope of this study and outlines the specific objectives.
Chapter 2 - This chapter focuses on the status quo of the Nacala Development Corridor
highlighting all the relevant areas to this study. The chapter gives a description of the
components that make up the corridor, namely Port of Nacala, CDN rail and CEAR Rail
companies. It introduces the present conditions and development of the corridor area at the time
the research was carried out.
Chapter 3 - In chapter 3, shall be presented the conceptual structure within which the
research for this paper was carried out. It shall outline the various steps adopted in studying the
research problem. As well as an evaluation of the relevant techniques used in the research,
what they would mean and indicate and the logic behind them.
Chapter 4 - Chapter 4 reviews relevant literature so as to provide a perspective of published
literature and studies related to corridor performance. It will include views and opinions of other
authorities on port and corridor operations, port selection criteria and operational performance
indicators. The chapter will also point out relevant research areas.
Chapter 5 - This chapter builds on the status quo presented in the second chapter. It further
defines the mode of operation, the method of functioning of the Nacala Development Corridor.
In closing, the chapter illustrates the current corridor‘s productivity and performance rate.
Chapter 6 - Results collected from the research will be discussed in this chapter. The
chapter will discuss the operations observation results as well as the responses to personal
interview questions. This chapter will link the literature from different authors as reviewed in
chapter four with existing conditions in the corridor.
Chapter 7 - In this chapter the research results presented and discussed in the previous
chapter will be analyzed. The analysis will be done by assessing the performance of transport
logistics in terms of time and reliability as well as determine their impact on corridor efficiency.
Suggestions and recommendations in the light of the findings and some theories already
presented by various authors are made.
Chapter 8 - Finally this closing chapter will present conclusions, in which key aspects of the
work are presented. The chapter seals the paper with the author‘s final conclusion based on
evidences, facts and theories already presented. This chapter also presents a bibliography as
an acknowledgement of the authors who provided the researcher with relevant material to the
research work and the appendices that show evidence of some materials used in the research
process.

2 STATUS QUO
2.1 Historical Information
During the 20th
century in Mozambique, ports were regarded as an essential economic
instrument of the Arab and later Portuguese colonial powers. After independence in 1975, all
ports were taken back by the government and were run and operated under the Ministry of
Transport (MOT). Later with the government‘s privatization campaign, the MOT gave out
concession to private companies to run and operate the country‘s major commercial ports,
Maputo, Beira and Nacala Ports.
The three major commercial ports in Mozambique play a fundamental role by giving gateway
access to sea to the geographically disadvantaged regions they serve as well as the nearby
land locked countries (LLCs). The three ports, Maputo Port in the Southern region, Beira Port in
the Central and Nacala Port to Northern part of Mozambique, strategically make up the nucleus
of the regional transport corridors. Below is an illustration of these main corridors.
Figure 2.1: showing the Maputo, Beira and Nacala Corridors with railway networks linking their respective hinterlands
Source: Africa-confidence.com
2.2 Background information of the Nacala Development Corridor
The Nacala Development Corridor is the principal gateway to the sea for Northern Mozambique,
most of Malawi and Southern Zambia. It interlinks Nacala Port with the railway network of
Northern Mozambique and Malawi creating a shorter connection to the sea than through the
alternative route which is through Zimbabwe to South African sea ports. Refer to the illustration
on figure 2.1 above.
Corredor de Desenvolvimento do Norte (CDN) is a private public partnership (PPP) that is
integrated into the Nacala Development Corridor. The majority of the shares in CDN are now

owned (since 2011) by the Brazilian mining giant Vale 51%. The other 49% are owned by
Portos e Caminhos de Ferro de Moçambique (CFM), a state enterprise that oversees ports and
the railway system of Mozambique. The PPP was awarded a renewable 15 year concession
(2005-2020) to run the Port of Nacala, the Northern railway network of Mozambique (610Km)
and the railway systems of Malawi (797Km). It operates under three heads, respectively CDN-
Port of Nacala, CDN- Rail and CEAR Malawi (Central East African Railways), under a single
management with the intention of integrating the synergies between different intermodal
transport systems in the corridor.
2.3 CDN- Nacala Port
Nacala Port is the third largest port in Mozambique in terms of cargo handling. The port is
situated at Longitude 40º 40' E and 14º 27' S, on the southern side of Baia de Bengo, a large
and sheltered bay of about 60m deep and 800m wide at its entrance. It is advantageously
located at the international container network cross-section of the Eastern African and the
Southern African circuits. Because of its natural deep waters and sheltered position Nacala has
no restrictions on ship movement or size with the exception of alongside the quay.
The port operates 24/07 on 3 x 8 hours shifts (from 07.00 to 15.00, 15.00 to 23.00 & 23.00 to
07.00 Hrs). Work on Saturdays (half day) and Sundays (full day) is charged as overtime.
Customs officials have an office at the entrance to the port but there is no shared data
interchange with the port, all information flow is through documentation and paperwork.
2.3.1 Port authority
The concession agreement between CDN and CFM gives the duties and jurisdiction of port
authority to CDN. It gives CDN legal rights, responsibilities and duties to manage, operate (even
through outsourcing to third parties) and rehabilitate the port during the agreed 15 year period.
CDN is also responsible by contract for providing pilot and tug assistance.
2.3.2 Port operations
CDN- PN outsourced the operational management of the port to Terminais do Norte (TN), but
still controls and monitors all operational activities. The main role of CDN in operations is
planning and instruction.
2.3.3 Container terminal
The container terminal is to the south of the port. It is 372m in length and has 2 berths and the
draft alongside is up to -14m. The terminal has an annual handling capacity of about
75,000TEUs. When full to capacity (3 high of full containers and 4 high on empties), it can
handle up to 6,722TEUs including 36 reefer units. The port also has a dry terminal for empty
containers outside the port area. The container terminal is divided into several areas designated
for container storage per regime namely, import area, export area and transit area.
There is one rail mounted train/truck transfer gantry crane with a loading capacity of 25tons.
Ship to shore handling is done by using vessel gear while handling in the terminal is done by
reach-stackers, tractors and forklifts.
2.3.4 Multi-purpose terminal
To the north of the port is located the multipurpose terminal. It has a length of 620m, with 4
berths. The draft alongside varies from -7.5m to -10m. Large bulk carriers with a large draft use
the container terminal, but priority is still given to container vessels. The terminal has 8
warehouses with total covered storage area of 21.000 square meters (an average of 7.000 tons
each) and an open storage area of 80.000 square meters.

There are 4 shore cranes in this terminal with a capacity between 5 - 20tons. Other handling
equipment include 3 bagging machines, 7 grabs, 2 forklifts, 6 hoppers, 2 evacuators and bale
clamps. The terminal has an annual throughput of 2,400,000tons.
2.4 CDN- Railways
Nacala Port is connected to the rest of the Northern Province and hinterland by a railway line
that runs directly into the port. In Nacala CDN Rail operates the shunting station with tracks
running into the port area separating the Container from the Multi-purpose terminals. It also
operates stations along the network which include Nampula, Cuamba and Lichinga. Along the
rail network, CDN provides both cargo freight service as well as passenger services.
The freight service is provided for imports and exports (both in containers and as bulk) to and
from Malawi via the Port. This is operated in unit trains of 1000 freight tons or 25 wagons of
freight usually shared by more than one customer. The transit times to or from points in Malawi
for these trains are on average 34 hours. Freight is also hauled to and from any of the stations
on the CDN network. Rail accounts for more than 70% of all transit traffic.
2.5 Present conditions and development trends of the Corridor area
2.5.1 Northern Mozambique
The Mozambican government in 2007 created the Nacala Special Economic Zone. The zone
consists of the district of Nacala Porto and Nacala-a-Velha (Old Nacala). Within this zone are
two Industrial Free Zones dedicated especially for industrial activities. The majority of the
population engages in agricultural activities and fishing. Forestry-related industries are also
prospering in this region compared to other parts of the country.
Heavy sands mining in Moma constitute the most important mining project in this region. Vale
has shown interests in mining the phosphate deposits in Nampula Province. Vale will also mine
1 million tons of iron annually from Monapo mines in Nampula Province. Vale and Australia's
Riverdale mining companies are heavily invested in Tete Province‘s estimated 23 billion ton of
coal, which is one of the world's largest untapped coal reserves. The mines have an annual
production target of 12million tons in the first phasei
. Vale plans to use Nacala bay once the
Beira port reaches full capacity by 2014.
2.5.2 Malawi
In 2006, the main contributor to the Malawian GDP was agriculture with 32.6%. Main agricultural
products consist of corn, rice, sugar, tobacco and tea among many other small scale products.
Tobacco and sugar are the main export agricultural products.
2.5.3 Zambia
Zambia‘s main industrial product is copper. Zambia is the world‘s number 7 largest producer of
copper and world‘s number 2 producer of cobalt. Yet the country being landlocked means it
does not have a direct access to the sea.

3 RESEARCH METHODOLOGY
3.1 Introduction
This study is an evaluative research; it seeks to assess the current logistics and operational
activities. It also provides useful information about clients‘ port selection criteria other than might
be gleaned by mere observation of cargo throughput trends. The evaluation research seeks to
provide objective assessments of past and present performance of the corridor.
This chapter will highlight the conceptual structure within which the research for this paper will
be carried out. It shall outline the various steps adopted in studying the research problem. Also
herewith shall be evaluated the techniques relevant for the research, what they would mean and
indicate and the logic behind them. Herein, the following shall receive much consideration:
 Conceptual structure,
 Methods that will be employed in data collection,
 Research tools, and
 Data analysis- qualitative and quantitative.
3.2 Conceptual (theoretical) framework
The following flowchart shows the conceptual framework of the activities that shall be followed
in this research process. The study will discuss several methodologies related to operational
management and key performance indicators for measuring terminal and corridor productivity
and efficiency levels.
Figure 3.1: Conceptual framework
3.3 Methods of data collection
In this research both primary and secondary data will be used. Primary data refers to data which
will be collected for the first time, while secondary data refers to data already collected by other
researchers which shall be adopted in this research and to whom reference and due credit will
be given.
3.3.1 Primary data collection methods
3.3.1.1 Observation
Through a tour of the whole Nacala Development Corridor, observations of all key operational
and logistics areas will be made. A more structured observation will be made for this descriptive
research. The strength of this method lies in the fact that it can yield more information than what
people are able or willing to share through interviews and questionnaires. However, the
Define
research
problem
Literature review
Review concepts
& theories
Review previous
research findings
Design
research
Data
collection
Data
analysis
Interpret
and
report

weakness is the method‘s limitation towards attitudes and policies that govern the corridor‘s
cargo flow behavior. Infrequent behavior may not be observed. Intense observations will be
conducted in the following key areas:
a. Quayside operations (Ship loading and discharge)
b. Truck & train operations
c. Documentation and cross-border formalities
d. Malawi railway turnaround system
e. Distribution centers
f. End users of the supply chain: hinterland delivery
Because of the limitations described above, the observation method will be supplemented by a
survey method.
3.3.1.2 Survey research method
The researcher will follow both structured and unstructured survey methods. The approaches
will be a mixture of both direct and indirect, with the aim of getting as much detailed feedback as
possible. The main methods that will be employed here include email correspondence, skype
interviews and personal one-on-one interviews. For the main corridor users and potential big
players, personal interviews will be conducted. This is because personal interviews provide a
more flexible setting and allow the interviewer to respond according to the interviewee‘s
reactions.
This type of research reaches the selected market segment and the targeted operational areas.
Nonetheless, respondents might be reluctant to share private company information; while others
may be biased by giving pleasant answers in a spirit of wanting to corporate.
3.4 Research tools
The objective in creating a research tool is to make sure that the research questions relate to
the objectives of the research study, thus qualifying the validity and quality of the research. It will
also help guide the research and avoid sidetracking into other might be interesting subjects but
not related to the topic.
3.4.1 Observation tool
In order to guide the observation exercise, the following tool will be used. Already established
Key Performance Indicators (KPIs) for the key functional areas within the corridor will be used
as a standard to measure against the observed result. Thus any deviation from the established
KPIs raises concern for further analysis and scrutiny.
Key functional area K.P.I (standard) Observed result Deviation %
Quayside (Vessel crane) productivity 10 containers/hr ? ?
Truck waiting time in port 2hrs ? ?
Train waiting time in port 1 day ? ?
Waiting time at en-route stations ? ?
Boarder formalities 1 hour ? ?
Train turn-around time 3 days ? ?
Table 3.1: KPI Observation tool

3.4.2 Interview questions to Corridor/Port users
A mixture of both open ended questions and closed questions will be used in interviews as
deemed necessary. Where possible, corridor users will be interviewed in their cargo reception
facilities; while corridor operators will interviewed in their working sites. This is important so as
to allow the interviewer to identify with the situation and generate further relevant questions from
the conducive setting. Following is a sample of interview questions to be used:
3.4.2.1 Clients
 What are your cargo volumes and how are they split over the regional ports?
 What criteria do you use when choosing a port for your imports/exports cargoes?
 What percentage of your cargo passes through Nacala Port and why not all since it‘s the
closest port to your location?
 What is it that you like about our competitors (Beira, Dar es Salaam, Durban ports)?
 What do you think needs to be improved at the Port of Nacala to make it more
attractive?
 What do you think needs to be improved with the railway operations to be more
efficient?
 What do you think are the main impediments or barriers to corridor efficiency?
3.4.2.2 Shipping lines/agents
 What are your cargo volumes and how are they split over the regional ports?
 Are you responsible for any cargo coming into your/our hinterland through other ports?
What are the volumes?
 Why do you think your clients sometimes choose other ports over Nacala?
 What do you think can be changed in the corridor to attract more clients to use Nacala
port?
 How do you feel about the corridor‘s current operational approach/system?
 How can port & agents integrate their efforts in attracting more clients to the port?
 What do you think can be done to improve port & rail productivity?
 What do you think are the main hindrances to corridor efficiency?
3.4.2.3 Trucking companies
 Which areas do you serve?
 How do you feel about the corridor‘s current operational approach/system?
 What is the average waiting time for your trucks at the port & at the border with Malawi?
 What are your main concerns with port operations?
 What do you think the port can do to improve truck/gate operations from your
perspective?
3.4.3 Interview questions to Corridor representatives
3.4.3.1 Senior management
 Which areas would you consider to be the corridor‘s hinterland?
 Which areas of the corridor would you consider as the key functional areas?
 What are the Key Performance Indicators for the corridor?
 What do think are the reasons for the loss of clients from the corridor?
 What is the corridor doing to regain the lost market share?
 What are the corridor‘s plans for improvement?
 Does the fact that the port directly subcontracted an operator eliminating direct
relationships between operator and shipping lines/agents, affect productivity?

 What incentives do you have in place for your operational team to increase their
productivity?
3.4.3.2 Port/Terminal operator
 Do you think loss in port customers is related to operator‘s productivity?
 What is your current quayside productivity rate?
 What needs to be done to improve cargo handling productivity and service delivery
rates?
 What incentives do you have in place for your operational teams to increase their
productivity?
 How do you feel about the relationship between you as operator and the port?
3.4.3.3 Shift supervisors
 What are your Key Performance Indicators?
 What do you think needs to be done to increase port productivity?
 How do you feel about the relationship between yourselves and the subcontracted
port/terminal operator?
3.4.3.4 Rail operators
 What is your annual cargo throughput?
 How do you feel about the relationship between port & rail?
 What are your major Key Performance Indicators?
 What is the average train turn-around time?
 What is the average train waiting time at this particular station?
3.5 Data analysis
Quantitative data shall be analyzed using descriptive statistics, mainly on percentages. The
results shall be presented in tables, pie charts, histograms and bar charts. Qualitative data shall
be analyzed and interpreted using relationships and linkages to the research question. Tables
and charts shall be used to illustrate the results.
3.6 Conclusion
The quality and type of information and data collected entirely depend upon the quality of the
research methodology utilized. In an attempt to get as much information as is possible, the
researcher will resort to using a variety of research methods and approaches. The approaches
will be customized and adapted to match the situation. This chapter has attempted to establish
the procedures through which the research will be conducted.

4 LITERATURE REVIEW
4.1 Introduction
Since improving port efficiency calls for a holistic approach, the low productivity and
inefficiencies of the Nacala Port can only be resolved by looking at the corridor as a whole. It is
alleged that the loss of clients and potential revenue is attributed to the corridor‘s inefficiency.
However, it takes understanding the parameters that determine clients‘ port selection criteria;
the hinterland served and port performance to evaluate the reasons for the port‘s inefficiency.
The main objective of this literature review is to provide a perspective of published literature and
studies that have been conducted to this regard. The chapter will also point out relevant
research areas. This chapter will thus review the literature relating to the following:
a) Port governance model;
b) Port Authority‘s role in ensuring hinterland accessibility;
c) Gateways and transport corridors;
d) The maritime/land interface;
e) The challenges of landlocked countries;
f) Port selection;
g) Port competition;
h) Port performance; and
i) Performance Indicators.
4.2 Port governance model
Jacobs (2007) defines the port governance model as ―the system of governance that steers
both infrastructure investment and maintenance, and the set of institutions underpinning service
provision which in turn answers questions of what is the balance between public and private
interests and when decisions about infrastructure development are made‖. The governance
model also defines the procedures by which the provision of leasing schemes and how
regulatory issues are settled. The division of the port governance models divides them into four
groups corresponding to the division of responsibilities of the public and private sector (Brooks
and Cullinane, 2007; World Bank, 2001; Jacobs, 2007):
4.2.1 Service port model
The first model is a predominantly public administrative model where the Port Authority owns all
the land and all available assets. It is normally controlled by the Ministry of Transportation. With
that organization it is normal that the responsibility for the performance of regulatory functions,
development of infra and superstructure and the execution of operational activities will be the
responsibility of the same governmental entity. Brooks and Cullinane (2007) add that because
of the centralized approach there is limited internal competition and as the result of there will be
inefficiency. That can lead to under-investments.
4.2.2 Tool port model
In this model the public Port Authority develops, owns and maintains the port infra and
superstructure. This includes cargo handling equipment such as quay cranes, forklift trucks, etc.
The equipment of the PA is operated by its own labor force, but other operations can be
performed by private companies. Brooks and Cullinane (2007) argue that such companies are

usually small, and the ―fragmentation in responsibility for cargo handling can lead to conflict
between those operators, and between the stevedoring companies and port administrators.‖
This approach avoids duplication of facilities and resources, but has the risk of underinvestment.
4.2.3 Landlord model
In a landlord model, the land of the port is in the hands of the PA, but the infrastructure is leased
to private operators. The private operators employ their own labor force; they maintain, install
and use their own superstructure. The responsibilities of the PA are to assure the long term
development of the land, and maintain the infrastructure. According to Brooks and Cullinane
(2007), that model leads to more efficiency and faster response to market changing
environment. The risks are connected with excess capacity in infrastructure that can press upon
expansion and private investment, and duplication of marketing efforts by the public and private.
4.2.4 Private Service port model
In this model, the government lack shows a lack of interest in the port activities. The land, infra
and superstructure, and labor force are privately owned or provided. The model is mostly
spread in the United Kingdom. It is said, that the port operations in this model can be flexible
and market oriented, but are bound to result in monopolistic behavior and lack of long term
economic policy or strategies.
The following figure summarizes the allocation of responsibilities in the different port models as
presented by the World Bank:
Figure 4.1: Allocation of responsibilities in port administrative models by the World Bank (www.worldbank.org)
Brooks and Cullinane (2007) argue that the World Bank typology is a ―simple approach of
allocating responsibilities that fails to provide adequate guidance to a government faced with
pressure to devolve port administration, taking in account local situation‖. Chapter 5 will
investigate that allocation of responsibilities at the port of Nacala. For the ongoing discussion let
it suffice to say that the Nacala Port falls under the tool port model, though it takes the form of a
landlord port model.
4.3 Port Authority’s role in improving hinterland accessibility
Once the port governance model is defined, the port authority‘s roles must be identified. Langen
(2008) argues that Port Authority should have a more active involvement in coordinating port
cluster and the supply chain. He suggests a more active involvement in hinterland connectivity.
Langen further supports his argument by observing that hinterland connectivity is becoming a
main bottleneck in international door-to-door transport chains. The rail and road network linking
Nacala Port to its hinterland especially Malawi reflects the existence of this bottleneck situation.

With the objectives of improving hinterland accessibility, investigations conducted by Langen
(2008) identified five necessary conditions for efficiency. First, well developed transport
infrastructure linking port to hinterland. Second, the transport infrastructure needs to be used
efficiently. Third, well coordinated transport chains. Fourth, sustainable hinterland transport
system; and fifth, attractive hinterland transport and auxiliary services. As will be acknowledged
later, the Nacala Port Authority has been less focused on improving hinterland accessibility and
more concerned with cargo operations.
4.4 Gateways
A gateway is a network point that acts as an entrance to another network argues Theo
Notteboom (2008). Rodrigue (2006) further defines a gateway as a pivot point of access
involving the flow of cargo through terminals constructed with the chief aim of efficient cargo
handling, thus facilitating intermodal transfers. Gateways are more than just terminals; they are
more about inland transportation connections that enforce continuity in freight distribution.
Robert J. McCalla points out the main components of a marine transport gateway to be: ―the
port, the urban center in which the port is located, the zone of influence (hinterland with its
inland distribution and consumption centers), and transportation connections tying the port to its
hinterland.‖ This concept of gateway-corridor is also reflected by the Nacala Port which serves
as a gateway to its hinterland making up the Nacala Development Corridor.
4.5 Transport corridors
Fleming (1999) defines a transport corridor as a set of routes between interacting hub centers
where maritime, fluvial, land and air transportation converge. Transport corridors can be
regional, integrating economic activities of more than a single nation, providing access to the
sea for geographically disadvantaged Land Locked Counties (LLCs). As Rodrigue (1996)
observed, transport corridors reduces and aims to eliminate inequality of accessibility at a
regional level. Their main objective should be to facilitate cargo flow within the concerned
region.
The best corridor paradigm that exemplify the Nacala Corridor is explained by Rodrigue (2009);
he states that the distribution model is one in which a major gateway acts as the main interface
between global, national and regional systems. It consists of the following characteristics: first,
regulating freight, passenger and information flows; second, transport corridors with a linear
accumulation of infrastructure serving a set of gateways; and finally, flows of merchandise and
their underlying activities of production, circulation and consumption. Following is an illustration
of the Nacala Development Corridor.
Figure 4.2 below shows how Nacala Port acts as the maritime/land interface as well as gateway
into the landlocked hinterland.

Figure 4.2: Physical cargo flow in the Nacala Development Corridor, compiled by author
In most African countries, transport corridors are vital as they serve as LLCs‘ gateway to the
sea. The main transportation arteries associated with these corridors are divided into two modes
having in most cases separated logistics, namely road and rail. Rodrigue (2009) observed that
each mode has its own technical constraints. He concluded that modes reflect the challenges in
reconciling the surge of maritime traffic and the capacity of inland transportation in distributing
the traffic flow.
Road: It is a commonly accepted fact that while road transportation is the most flexible mode
with a far reaching capability than other modes, it is also equally expensive. Apart from the poor
road infrastructure which reduces road traffic, the usage of road to access the Nacala Corridor
hinterland is longer in distance and more expensive this in turn places the burden of cargo
distribution on rail, consequently offsetting the balance in modality split in favor of rail.
Rail: This mode of transportation offers both capacity and low cost, but all at the expense of
flexibility. Henstra & Woxenius (1999) argues that rail logistics are ―highly complex and imply
network management strategies under several constraints of capacity, schedule, nature of
shipment, origin and destination‖.
The main challenges of the Sub-Saharan Africa transport corridors as reported by The World
Bank‘s Independent Evaluation Group1
include poorly maintained roads and railways,
complicated customs and administrative procedures which add to delays and costs; and
inefficiency in terminal cargo handling especially during transfer from one mode to another.
4.6 The maritime/land interface
According to Rodrigue (2009), the main functional elements that define the maritime/land
interface include:
1
Improving African Transport Corridor 2011 publication

Foreland- from whence the cargo is flowing into the port system for further (re)distribution. This
involves the services provided by agents and shipping lines in terms of vessel calls, capacity
and frequency of services.
Port system- these act as gateways providing infrastructure for modal change as well as
granting access for inland cargo flow and circulation into the hinterland.
Hinterland- this refers to the inland geographical area interdependently connected to the port
system.
Langen (2008) argues that the quality of a port‘s hinterland access depends on the behavior of
many actors, including terminal operators, freight forwarders, container operators, and the port
authority. Figure 4.2 adapted from Langen and Horst (2008) below shows various firms involved
in a rail hinterland chain.
Figure 4.3: Various firms involved in a hinterland chain, source: Langen (2008)
4.7 Hinterland
A hinterland is widely acknowledged to be an area over which a port draws the majority of its
business, regardless to whether or not the hinterland is within the administrative jurisdiction of
the port authority. Fageda (2005) defined it as an area where a port has a monopolistic position.
Rodrigue (2005) further adds that port hinterlands are composed of two kinds of hinterlands, the
main hinterland and competition margin hinterland. He defined the main hinterland as an
exclusive area where a port has a monopolistic position in drawing cargo. While he defied the
competition hinterland, as the outer area where more than two ports compete for cargo. In this
regards, the Nacala Port hinterland can be divided between the two kinds of hinterland as below
illustrated. The main hinterland of Nacala Port is thus considered to be the most accessible
areas from the port. This is the area over for which the port has a more competitive advantage
compared to other ports.

Figure 4.4: The two kinds of hinterland; adapted from Rodrigue (2005)
4.8 Types of hinterlands
Notteboom and Rodrigue (2007) identify three sub-components of a hinterland: the macro-
economic, the physical and the logistical hinterland.
4.8.1 Macro-economic hinterland
Notteboom and Rodrigue (2007) observed that a macro-economic hinterland involves factors
which affect transport demand such as origins, destinations, and the whole transactional
environment in which the actors generating this demand evolve. Other factors considered which
affect the generation of international maritime freight traffic include interest rates, exchange
rates, prices, savings, and productive capacities.
4.8.2 The physical hinterland
The physical hinterland is a matter of transport supply, from a modal and intermodal
perspective. This type of hinterland considers the network of transport infrastructure, modes and
terminals connecting the port to its hinterland. ECMT 2001 observed that, intermodal
transportation has become of particular relevance to improve the efficiency and accessibility of
hinterlands as it links the global access of the port (through its intermodal facilities) with regional
customers. The Nacala Development Corridor serves this type of hinterland.
There are significant variations in the structure of hinterlands, mainly because of differences in
the capacity and efficiency of inland transport infrastructures. Wang and Oliver (2006) noted that
China is characterized by smaller hinterlands due to the container export-oriented strategy;
while North America and European ports have larger hinterlands shaped along long distance
inland corridors. The Nacala Development Corridor is medium in structural size, but its limitation
is more due to infrastructure development and little less to corridor capacity.
Competitive margin
Main hinterland

4.8.3 The logistical hinterland
Logistical hinterland is more to do with cargo and information flow, how they are organized, and
how they relate to both macro-economic and physical settings of the hinterland. Hesse and
Rodrigue (2004) contend that the competitiveness of global supply chains is to a large part
determined by the performance of the logistics networks as they link production, distribution and
consumption. Figure 4.4 below summarizes the elements, attributes and challenges of the three
types of hinterland as discussed above.
Figure 4.5: Types of port hinterland, (Notteboom and Rodrigue 2007)
4.9 Bottlenecks
Webster's Millennium Dictionary of English" (Lexico Publishing Group, 2003) defines bottleneck
as: "n: a narrowing that reduces the flow through a channel; v 1: slow down or impede by
creating an obstruction; 2: become narrow, like a bottleneck...‖ As water is poured out of a
bottle, the rate of outflow is limited by the width of the conduit of exit—that is, bottleneck.
Wikipedia also defines it as ―a phenomenon where the performance or capacity of an entire
system is limited by a single or limited number of components or resources.‖ii
From the above definitions we can deduce that a bottleneck situation in a transport corridor is a
part of the network that reduces the performance or capacity of the whole system. These
situations are in most cases a result of limited resources. Scott Barber iii
(2007) argued that, the
symptoms of a bottleneck are almost never observed at the actual location of the bottleneck.
B. Prentice (2004) observed that there three different types of bottlenecks in transport systems.
These include infrastructural, regulatory and supply chain bottlenecks.
4.9.1 Infrastructure and equipment bottlenecks
These are formed by physical restrictions such as roads, railway lines or handling equipment.
Lack of investment in infrastructure can produce chronic bottlenecks especially when rapid
economic growth takes place in the hinterland served. This implies that the capacity will thus
become insufficient to keep up with the demand. A surge in demand can also create a
bottleneck as infrastructures and equipment are designed to convey a constant level of service.
Some of the bottlenecks along the Nacala Corridor are attributed to poor and deteriorating
infrastructure. The railways line with constant derailments and breakdowns causes congestion
and delays at various stations along the line. Shortage of rail wagons also creates another
bottleneck as cargo is forced to accumulate at the port waiting to be railed out.

4.9.2 Regulations
Regulations that delay cargo movements for security or safety inspections create bottlenecks as
a direct consequence. Even if the intention is not to convey delays, regulations inevitably cause
delays and disruptions. Three sources of bottlenecks created by the indirect effects of regulation
are cabotage restrictions, competition policies and fiscal policies. Cabotage restrictions prevent
foreign carriers from carrying freight within a country; their capacity is thus not available.
Competition policies can create bottlenecks either by supporting a monopoly where the operator
engages in rent seeking strategies or by complete deregulation where many carriers will
compete for the similar transport segments. Fiscal policies can deter investments through
taxation and create bottlenecks.
In Nacala Corridor, the compulsory scanning of incoming and outgoing cargo from the port
poses a bottleneck situation that reduces the efficiency of the corridor as a whole.
4.9.3 Supply chain bottlenecks
These relate to specific procedures in supply chain management that trigger bottlenecks. For
instance labor availability, such as work shifts, may impose time dependent capacity shortages.
Technology can also be an issue as different information exchange protocols can create delays
in information processing and therefore delays in shipments (or transshipments). The figure
below illustrates the three types of bottlenecks.
Figure 4.6: three types of bottlenecks in a transport system (World Bank report)
In a bottleneck situation, optimizing features or processes in other areas of the process will not
produce a change in the performance of the network until the performance problems in the
bottleneck itself are addressed.
4.10 The Challenges of Landlocked Countries
Africa has the most number of landlocked countries in the world. The main problem with regard
to being landlocked is the geographical remoteness from the sea and transit dependence which
complicates the export and import processes. As a result landlocked countries‘ trade less and
grow more slowly than neighbouring coastal countries.
According to a World Bank study the cost of transporting a container from a landlocked country
to a port in a developed country is 20% higher than transporting from a coastal country. The
main causes of the higher costs are inadequate transit transport inter-modal connections,
regulation and poor service.

The cost of importing from a landlocked country is also rising and the Study also suggests that
improving road infrastructure alone is not sufficient to eradicate inefficiency and high transport
costs. The other main problems are associated with port infrastructure and the quality of port
services which affect the cost and process of dispatching goods in and out of transit countries.
In addition, it is estimated that manufacturers shipping from within the Southern African
Development Community (SADC) hinterland pay nearly three times more in container handling
charges at SADC ports than manufacturers shipping from Europe. In some countries the cost of
importing a standard-sized container is reportedly more than twice the world average. Added to
these charges are the indirect costs associated with time delays at the port of entry and costs of
transporting goods to inland destinations and in particular onward delivery to landlocked
countries2
.
The time required exporting and importing goods, including inland transport, customs clearance,
and port clearance, is greater in the SADC region possibly than in any other region of the world.
In 2007, the average time to export from SADC was 18.9 days, of which nearly one-half
consisted of customs clearance, whereas the average import time was 28.5 days, divided about
evenly among inland transport, customs, and ports3
.
Figure 4.7: Intermodal Transit in SADC from LLCs (World Bank report)
The many steps, the fragmentation of control, and the low quality of services make the supply
chain unpredictable, which shows up in the spread in transit times (refer to figure 4.7 above).
Other factors make the delivery process unpredictable or unreliable from one end of the chain to
the other: breakdowns of key infrastructure, breakdowns of transport equipment, insecurity, and
fuel shortages4
. All these factors mean additional inventories, emergency shipments, suspended
operations, and lost markets.
Clark‘s evaluation of seaport efficiency (2005) concludes that shipping costs would reduce
greatly if there is a notable improvement in seaport infrastructure and cargo handling services
quality. Haddad (2006) also adds that the level of port efficiency directly determine the relative
distance and cost between different trading regions. Thus as Ducruet, Notteboom and Langen
(2009) observed, the quality and improvement of the infrastructure brings trade partners
theoretically closer or more distant.
2
Source: Lynette Gitonga (a resource for global trade issues and solutions from an African perspective)
3
World Bank’s Doing Business 2007 report
4
Subsidies of diesel in landlocked states are potentially a fiscal drain, as truckers from transit countries will fill up
in the landlocked states.

4.11 Four Possible Trade Routes for Malawi
Nacala Beira Durban Dar-es-Salaam
Distance 1,000km 900km 2,300km 2,000km
Main transport mode Railway Road Road Road
Infrastructure condition Poor Good/fair Good Good/fair
Port reliability Low Medium High Medium
Delay in port 3 weeks or more 2 weeks 1 day 4 weeks
Transit time Unpredictable 2-3 days 1 week Unpredictable
Main export product Sugar Tobacco Tea/tobacco Limited
Table 4.1: Four possible Trade routes for Malawi, adapted from World Bank 2009
The table above shows the four main possible and often used trade routes for Malawi as
published by the World Bank in 2009. Besides being the second closest to Malawi, Nacala is the
only trade route offering Malawi a direct railway connection to the sea port. Railway comes with
many advantages of cost effective as well as accommodating heavy containers and bulky
cargoes. A twenty foot container costs $1.100 less to Blantyre through Nacala Port than it will
cost through Beira Port.
4.12 Port selection
Hence it follows; there is more to just distance and travel time that determine the shipper‘s port
selection criteria. The literature reviewed indicates that the determinants to port selection vary
from port/corridor-service related factors to cost factors. For different port regions, the authors
have identified important criteria respectively. The widely mentioned criteria with reference to
shippers according to Guy and Urli (2006) include:
a) Infrastructure: nautical accessibility profile, terminal infrastructure, handling equipment and
hinterland accessibility;
b) The geographical location: distance from hinterland and major shipping routes;
c) Port efficiency: port operations quality and reputation;
d) Reliability, efficiency, frequency and cost of inland transport services by truck or rail;
e) Quality and cost of auxiliary services: stuffing and stripping, storage, etc;
f) Efficiency and costs of port management and administration (port dues);
g) Port security/safety reputation;
Notteboom (2008) emphasizes on the shipper‘s need for a more supply-chain oriented
approach to port selection. In his discussion paper presented at the International Transport
Forum, he argued that since the supply chain is becoming more relevant in analyzing port
competitiveness; ―port competitiveness thus becomes more dependent on external coordination
and control by outside actors.‖ This therefore means that port choice becomes a function of
network costs.
Port selection criteria thus take into consideration the whole supply chain wherein the port is just
a node and part of the whole. A shipper will then select a sea port that will contribute in total
transport cost reduction. Magala and Sammons (2008) observed that port choice is but a by-
product of a choice of a logistic pathway.
Notteboom (2008) argues that shippers more often than not opt for a more expensive port due
to additional port related and modal costs in the other port that can be offset and compensated
for by savings in other logistical costs. These other costs include:

a) Time costs of the goods: capital tied up in the transported goods as well as economic
and technical depreciation; and
b) Inventory costs.
He concludes that concerns over capacity both of ports and inland infrastructure have led to the
opinion makers base their port selection decisions on reliability and capacity over pure cost
considerations. Robinson (2002) adds that in a competitive environment, ports do not compete
only on the basis of location and operational efficiency, but also on the basis of how well they
are embedded in the supply chains of port users. The competitiveness of a port thus does not
depend entirely on its internal forces alone, but also on its ability to synergize efforts with other
transport nodes and logistics networks that shape the supply chain of the corridor.
4.13 Port competition
There are two generally accepted types of port competition, inter-port and intra-port competition.
The former refers to competition between ports, while the later refers to competition within ports.
Due to the almost nonexistence of intra-port competition within the scope of this study, only
literature relating to inter-port competition will be reviewed herewith.
4.13.1 Inter-port competition
The rail linkage to Malawi gives Nacala Port a substantial advantage forming a captive
hinterland. But due to inefficiency and lack of investment in transport facilities, the advantage is
diminished leading into a contestable hinterland. Langen (2008) defined a contestable
hinterland as one in which more than one port shares the same market. He further maintains
that captive hinterlands have diminished as ports become unsatisfied with cargo coming only
from their captive hinterlands, but rather stretches their influence further.
Fleming and Baird (1999) argue that inter-port competition is influenced by the following factors:
a) Port performance; b) Port location and accessibility; c) Port tradition; d) governance
assistance; e) Port user‘s preferences. Wayne (2009) further adds that improved port
performance, and reducing ―technical and costs inefficiencies‖ will increase the port‘s
competitiveness.
Port‘s competitiveness also is increased by accessibility both to land and to the sea. The closer
the port is to the open sea, the lower the auxiliary costs associated with bringing a ship to berth.
Better hinterland connectivity to the port reduces inland transit times and transportation costs.
All these factors pull and attract port users.
4.13.2 Intra-port competition
Intra-port competition is essential and beneficial in curbing monopolistic pricing by service
providers, argued Wayne (2009). Apart from reduction in prices, it is a widely accepted fact that
in areas where there are two or more providers of the same service, the quality of the service
provided is bound to be of an improved quality. It can be argued that some of the service
inefficiencies within Nacala port are related to lack of intra-port competition. Langen and Pallis
(2006) argue that competition in the port will lead to more innovation and specialization with
benefits for the port as a whole.
4.14 Port performance
Notteboom and Rodrigue (2007) argue that the performance of seaports is strongly entwined
with the development and performance of associated inland networks that give access to cargo
bases in the hinterland. As far back as tradition goes, ports have been measuring their
performances by comparing their actual cargo throughput against their optimum throughput.
Any deviation from the optimum is interpreted as either an improvement in performance or

deterioration. However, for the sake of this study, much attention shall be given to the use of
performance indicators to evaluate port performance. Port performance shall be discussed
under two heading, port effectiveness and port efficiency.
4.14.1 Port effectiveness
Efficiency has been defined as ‗doing things right‘ while effectiveness is ‗doing the right things‘
by Taylor and Francis (2011). It is essential that a balance between the two is created and
maintained. Brooks (2011) argues that in order to improve the performance of the port system,
efficiency measurement must be accompanied by the measurement of effectiveness of the
whole system.
Taylor and Francis (2011) support their argument by asserting that port effectiveness must be
assessed in two ways. First by users determining that the port‘s performance is satisfactory; and
secondly, by an assessment done by the relevant decision-makers, i.e. governments, port
authorities, or service providers. The findings should then be addressed with ports so that they
may fine tune operations to meet customers‘ expectations and competition.
4.14.2 Port efficiency
An efficient port facilitates the efficient flow of goods which lowers the cost of transportation and
improves the quality of service provided, thus allowing more competition among carriers and
attracting more users. A port is regarded as ‗efficient‘ or ‗highly productive‘ if it is able to produce
a maximum output for given inputs or uses minimal inputs for the production of a given level of
output Notteboom (2000). The efficiency of a port is measured against its objectives.
Wayne (2009) contends that efficiency operating objectives are classed in two. First- port
efficiency operating objectives also referred to as the port‘s economic production function- this is
the port‘s technical ability to maximize throughput using a given level of resources. Second- cost
efficiency or the port‘s economic cost function- which is the ability to minimize cost in the
provision of a given level of throughput.
He further adds that for a port to be cost efficient, it must be technically efficient. World over
there is ample evidence to support the claim that when ports are technically inefficient, it has a
negative effect on both sides of the supply chain. It leads to longer ship turnaround times and
increased cargo dwell time in ports.
The results as observed by Wayne (2009) will be on one hand, the shipping line deploying more
vessels to service the affected trade route; and on the other hand, shippers will be forced to
increase their inventories due to the less reliable delivery systems. Marlow and Paixao Casaca
(2003) conclude that as a consequence ineffective ports usually have lower profits, thus having
less profit to invest in further port development.
Poitras, Tongzon and Hongyu Li (1996) observed that being efficient involves combining
available inputs to achieve a higher level of outputs. Now it follows that to be able to measure
efficiency, the right inputs and outputs must be defined and measurable. They identified two
measures for port outputs, namely, one, total number of cargo loaded and unloaded; and two,
cargo handled per berth hour. Improving efficiency in cargo handling leads to quicker ship
turnaround time and consequently maximizing berth utilization.
Poitras, Tongzon and Hongyu Li (1996) supports their argument by adding that once the major
port output measures are identified, it becomes easy also to identify the various input factors
involved. Such input factors include: number and frequency of ship calls as determined by port

geography; the quality and quantity of support infrastructure such as container berths, and
gantry cranes.
4.15 Key Performance Indicators
―Performance indicators quantify and simplify information for decision-makers and other
stakeholders to assess how activities and operations affect the direction and magnitude of
change in terms of social economic, governance and environmental conditions.‖ Vitsounis
(2011).
Due to the existence of inter-related aspects and activities in the port which cannot be
considered in one single measure or indicator, a number of efficiency indicators have been
developed to use as a basis for evaluating port performance. These indicators should provide
insight to port management into the operation and behavior of key functional areas. According
to the UNCTAD manual on port statistics (TD/B/C.4/131/Supp.1/Rev.1), performance indicators
can be used, first to compare performance with another target, and secondly, to observe the
trend in performance levels.
Talley (1986) contends that there are two methodologies that may be followed when selecting
performance indicators. These two are operating objectives specification methodology and the
criteria specification methodology. The first methodology requires the specification of operating
objectives, while the second specifies the criteria that should be satisfied by the selected
performance indicators. Since the Nacala Corridor is run by a private party, the main operating
objectives are to get a return on investment within the contracted concession period.
Performance indicators can be both operational and financial. The primary financial indicator for
each terminal is the contribution per ton of cargo handled over a specific period of time. For the
sake of this research, only literature regarding the operational performance indicators shall be
taken into account.
4.15.1 Operational performance indicators
Operational indicators are of more direct concern to port management than financial indicators.
The United Nations Conference on Trade and Development (UNCTAD) publication on Port
performance indicators argues that with all things being equal, through the control of operational
performance, management will be able to simultaneously control financial as ell as operational
performance. The United Nations publication contends that the most important operational
indicators are as below stated:
a. Arrival Rate: This is the number of ships arriving in a month divided by the number of days
in the month.
b. Waiting Time: This refers to the total amount of time a ship waits after arriving at the pilot
station until berthing in the terminal divided by the number of berthing ships.
c. Service Time: This is the total time between berthing and departure of a ship divided by the
number of ships calling in the time period under consideration.
d. Turnaround Time: This refers to the total time between arrival and departure of ships
divided by the number of ships.
e. Ton/TEUs per ship: This is the total tonnage/TEUs worked for all ships divided by the
number of ships worked.
f. Fraction of time berthed ships worked: This is the total actual time that berthed ships
worked. It is calculated by dividing the total working time for all ships by total time between
berthing and departure.
g. Average Berth Occupancy Ratio: This ratio is obtained by dividing the time a berth has
been occupied by the time a berth is available during a given period of time.

h. Tons/TEUs per ship hour in port: This is calculated by dividing the total tonnage/TEUs
moved by total time between arrival and departure.
i. Tons/TEUs per gang-hour: This is calculated by dividing total tonnage/TEUs worked by
total gang time.
A standard should be established for measuring performance in each indicator. Corrective
action should follow in cases where actual performance is outside the established ranges in
order to determine reasons for the variations and take steps to correct the deviation. Below is a
table showing a summary of a port‘s operational key performance indicators.
Primary Indicators Subsidiary indicators
Ship turnaround time (Hours/ship)
Time awaiting berth
Time at berth
Service time (Time at berth working)
Time awaiting departure
Total port time
Shipping performance
Tons/TEUs per ship-hour in port
Tons/TEUs per gang-hour in port
Delays while alongside
Port
Arrival rate
Average berth occupancy ratio
Arrival entry delays
Tons/TEUs per ship
Cargo dwell time Tons/TEUs per working time
Table 4.2 Summary of operational indicators, adapted from Carlson (1993)
Figure 4.8: Time related KPIs (Carriou, 2011)
The figure above from Port Economics was adopted from Carriou (2011) and illustrates the time
performance indicators between ship arrivals until leaving the port. It also shows how productive
time which is time in cargo operations is but a small fraction of the total time.

4.16 Conclusion
This chapter has summarized relevant literature related to transport corridors, the problems
faced by landlocked countries, port selection criterion as used by shippers, port competition,
performance as well as performance indicators. Transport corridors are very essential in
providing easy accessibility for the distribution of cargo into geographically disadvantaged
landlocked hinterlands. The literature herewith reviewed has emphasized the importance of
synchronizing efforts within the entire corridor in order to improve competitiveness of the whole
network. It has also suggested that setting up performance indicators creates the standards for
the key operational areas directing them at achieving established functional objectives.
However, this literature review is not exhaustive; other relevant references that were not cited
herein may be used in the succeeding chapters as appropriate.

5 MODUS OPERANDI
5.1 Introduction
Chapter two was an introduction to the Nacala Development Corridor and the socio-economic
environment surrounding it that influence in one way or the other, the function of the corridor.
This chapter shall illustrate the modus operandi, the method of operating and functioning in the
Nacala Corridor. It will thus lay the foundation for a discussion on the research findings in
relation to the literature already reviewed. The chapter will also identify corridor‘s functional
areas and highlight some of the bottlenecks associated with these functional areas.
5.2 Governance structure
The management structure and legal position of the port authority in Nacala Port drifts a little
from the generally accepted landlord model. All infrastructures belong to the state enterprise
CFM. Unlike the landlord model discussed in the literature review, CFM passed on the legal
rights of Port Authority (PA) to CDN in the concession agreement. Thus CDN is responsible for
developing the port, managing the government assets dedicated to international maritime
commerce, assuring access to the port and the hinterland thereof.
CDN collects all the access, light, canal and quay dues connected with the entrance or stay in
the port of a ship. CDN is also responsible for funding the port for superstructure and
infrastructure needed. The initial idea is that the PA should be responsible for funding normal
operations, while the other requirements should be supplied by the government when
demanded and approved. CDN also runs port cargo operations through a subcontracted
company. By this, CDN assumes the responsibility of providing cargo handling equipment as
well as servicing and maintaining the equipment.
As the PA of Nacala Port, the port does not perfectly fit in the Landlord model, as there are a
mixture of roles and responsibilities. The port governance structure for Nacala Port is stuck in-
between a tool port and a landlord port. However it is closest to the tool port model, which
Brooks and Cullinane (2007) argue that can lead either to under-investment and limited internal
competition.
5.3 Port cargo operations
5.3.1 Container handling
Vessels calling Nacala Port are required to give a notification of arrival through the shore agent.
36hrs prior to arrival, the agent has to submit to the port a provisional loading and discharge list,
followed by the final lists 24hrs prior to vessel arrival. The final lists are submitted at or prior to a
vessel operations pre-plan meeting held with the agent, CDN, TN (stevedoring), ITS and
pilotage. The provisional lists are used by CDN terminal management for yard planning.
Because the container terminal has no ship-to-shore handling equipment, all containerships
calling Nacala Port need to have own loading and discharging gear. Each vessel is operated by
a gang of 14 stevedores. 1 crane operator, 1 signal man, 4 on board (lashing & unlashing) and
4 on the ground and the other 4 are chiefs/supervisors.

Nacala Development Corridor Performance Evaluation 2012

Nacala Development Corridor Performance Evaluation 2012

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